by: Patrick A. Randolph, Jr.
Professor of Law
UMKC School of Law
randolphp@umkc.edu
The reporter for today's case is Jim Stillman of Murphy, Weir and Butler in San Francisco.
BANKRUPTCY; BAD FAITH FILING: A Bankruptcy Court has authority to make an order in one case directing that the stay in any subsequent case will not apply (a) as to a specific creditor, (b) unless otherwise ordered by the court.
In re Felberman, 196 B.R. 678 (Bankr. S.D.N.Y. 1995).
Upon the filing of the fourth petition in a series of bankruptcies, the court was faced with "debtors acting in bad faith to interminably prolong their occupation of premises for which they cannot or will not pay and frustrate creditors in the exercise of their contractual and statutory rights." Section 349(a), allowing for the dismissal of a bankruptcy case on conditions, permitted the Bankruptcy Court in the earlier case to provide for such limited, prospective relief here. The debtor's motion to vacate the creditor's foreclosure sale was denied.
Reporter's Comment 1: A variation on the conditional dismissal is an order authorizing foreclosure in subsequent cases so long as the sale is returned for bankruptcy-supervised confirmation. See In re Burton, 195 B.R. 588 (Bankr. W.D.N.Y. 1996). In another recent case, In re Friend, 191 B.R. 391 (Bankr. W.D.Tenn. 1996), the Bankruptcy Court held that a "with prejudice" or "last opportunity" order in a previous case should be accorded "appropriate evidentiary weight" in the subsequent filing, but could not void the stay prospectively, because the stay is truly "automatic" as a matter of statute upon the filing of a petition.
Reporter's Comment 2: Why do creditors wishing to foreclose seek dismissal of the case? The better remedy is to seek relief from stay for cause; then, insist that the putative bad faith case not be dismissed, so that its pendency makes all the harder any subsequent filing.
Items in the Daily Development section generally are extracted from the Quarterly Report on Developments in Real Estate Law, published by the ABA Section on Real Property, Probate & Trust Law. Subscriptions to the Quarterly Report are available to Section members only. The cost is nominal. For the last five years, these Reports annually have been collated, updated, indexed and bound into the Annual Survey of Developments in Real Estate Law, volumes 1-5, published by the ABA Press. The Annual Survey volumes are available for sale to the public. For the Report or the Survey, contact Laprica Mims at the ABA. (312) 988 6233.
Items reported here and in the ABA publications are for general information purposes only and should not be relied upon in the course of representation or in the forming of decisions in legal matters. Accuracy of data and opinions expressed are the sole responsibility of the DIRT editor and are in no sense the publication of the ABA.